Ariz. Franchise-Fee-Reduction Bill Fails

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Arizona operators have failed to convince legislators there of the value of limiting local taxes on cable service.

However, the legislative session is not over, and given early support of the bill in the House, the Arizona Cable Telecommunications Association hopes to find a way to revisit the issue this session.

The industry-backed bill would have limited franchise fees to 1% of an operator’s gross revenue, plus any applicable local sales tax, or 5% of gross revenue -- whichever amount was smaller.

Fees beyond that amount -- such as financial support for public, educational or government programming -- could not be mandated by regulators but could still be offered by a cable operator as part of the give-and-take of the franchise-negotiation process, according to the bill.

But the bill instantly attracted a coalition of opponents, from the lobby for cities and counties in Arizona to national organizations such as the National Association of Telecommunications Officers and Advisors and the Alliance for Community Media.

Last month, the bill passed the House, and it then went to the Senate, where it was also approved, but with amendments. Because of the amendments, it had to go back to the House for final approval.

On April 11, the bill failed on a tie vote, but the chamber reconsidered it the next day. On reconsideration April 12, it failed on a 30-28 vote. The measure needed at least 31 ayes to be moved on for the signature of Gov. Janet Napolitano.

ACTA executive director Susan Bitter Smith said the association believed it had the support of that critical 31st voter, but the legislator became ill and left the floor before the vote.

“A lobbyists’ worst nightmare,” she added.

Opponents said the failure of the bill is a victory for local control of cable franchising. They argued that the bill would have cut the fees charged to cable companies for the use of the public rights-of-way by 20% and would have led to the elimination of local cable channels.